Wolseley, the building materials group, has sold some of its Irish businesses in what analysts believe could be the start of a new restructuring process.

The company has disposed of all of its branch network in the Republic of Ireland as well as the Brooks business in northern Ireland for £23.8m. The buyer is a private investor backed company called WIBHM. Wolseley said the sale was part of its strategy to concentrate on areas where it has sufficient scale, leading market positions and can deliver an appropriate financial return.

But with the company booking a £50m loss on the disposal, its shares have slipped 5p to £14.33. Analyst Paul Checketts at Oriel Securities issued a hold note on Wolseley. He said:

[The disposal] could be the first step in an overhaul of the group's portfolio of businesses under Ian Meakins. Only £6.5m will be in cash up front, the remainder is a loan from Wolseley to WIBHM with a coupon of 10%. The price represents 0.13 times sales (£204m last year). The Irish businesses lost £30m in 2009. Despite its collective size on a national and international basis, Wolseley lacks scale on a local level.

2010 is likely to be a year of divestment as Ian Meakins looks to focus on core markets. The shares are trading on 9.6 times 2010 estimated EV/EBITDA. That is almost right on the 5-year average of 9.9 times.

Andy Brown at Panmure Gordon was more negative. In a sell note on the company, he said:

The disposal of its Irish operations is in-line with its strategic focus. While the proceeds are not huge it will remove a loss making operation. While this should help sentiment, we continue to see better opportunities elsewhere in the sector. Our cautious stance on Wolseley relates to on-going concerns about non-residential markets, speed of US housing recovery and full valuation.